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CZA - Coal of Africa Limited - Report for the quarter ended 31 March 2011
Coal of Africa Limited
(previously, "GVM Metals Limited")
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
JSE Share code: CZA
ASX Share code: CZA
ISIN AU000000CZA6
(`CoAL` or `the Company`)
REPORT FOR THE QUARTER ENDED 31 MARCH 2011
Coal of Africa Limited ("CoAL" or "the Company") provides its operational report
for the quarter ended 31 March 2011. A copy of this report is available on the
Company`s website, www.coalofafrica.com
HIGHLIGHTS
- Increased production of 1,109,447 tonnes of run of mine ("ROM") coal (Q2:
954,915) and 710,590 tonnes of export quality coal (Q2: 686,403) at the
Company`s Woestalleen and Mooiplaats thermal collieries.
- Submission of the New Order Mining Right ("NOMR") application for the
Makhado coking coal project ("Makhado Project") and formal acceptance of
the NOMR application by the South African Department of Mineral Resources
("DMR").
- Execution of the New Order Prospecting Rights ("NOPR") for the Rio Farm
Swap.
- Extraction of bulk sample from the Makhado Project completed and processing
of bulk sample commenced.
- Increase in Company`s export allocation at the Matola terminal in Maputo,
Mozambique ("Matola Terminal") from 1.0 to 3.0 million tonnes per annum
("mtpa").
- Securing of US$50 million export finance facility with Deutsche Bank AG,
Amsterdam ("Deutsche Bank") and repayment of the JP Morgan Chase ("JPMC")
US$20 million facility.
- Cash balance at the end of the quarter of A$25.1 million.
Commenting on the results, John Wallington, Chief Executive Officer of CoAL
said: "The measures implemented at Mooiplaats and Woestalleen collieries started
to impact positively during the quarter under review. During March 2011, CoAL`s
export allocation at the Matola Terminal increased from one to three mtpa, which
will increase the proportion of total sales that would be exposed to current
export market prices which averaged above US$120/tonne during the period under
review."
"The Company continues to engage with the relevant government departments to
fully comply with all applicable legislation at the Vele Colliery. Further
updates will follow in due course."
QUARTERLY COMMENTARY
WOESTALLEEN MINES AND PROCESSING PLANT - WITBANK COALFIELD (100%)
The Zonnebloem mine continued its impeccable safety record in the March quarter,
with the site not recording a single lost time injury since start-up in 2008.
The Woestalleen plant site recorded two lost time injuries during the quarter,
resulting in an increased focus on safety through the initiation of additional
safety audits.
Production at Woestalleen`s open cast mines increased by 11% compared to the
previous quarter, yielding 845,515 tonnes (Q2: 761,393 tonnes) of ROM coal.
Zonnebloem produced 727,223 tonnes (Q2: 639,087 tonnes) and Hartogshoop 118,292
tonnes (Q2: 109,790 tonnes) of ROM coal. Klipbank colliery was mined out in the
previous quarter (Q2: 12,516 tonnes) and is in the process of being closed.
A total of 907,978 tonnes (Q2: 829,065 tonnes) of ROM coal was processed at the
Woestalleen processing facility during the quarter, producing 499,117 tonnes
(Q2: 500,940 tonnes) of export quality coal and 84,850 tonnes (Q2: 97,368
tonnes) of middlings product for Eskom, the South African electricity utility.
The overall yield of 64.3% (Q2:72.2%) was lower than in the previous quarter due
to lower quality of ROM coal mined.
MOOIPLAATS COLLIERY - ERMELO COALFIELD (100%)
Although Mooiplaats had reported no lost time injuries for more than six months
from August 2010, the colliery reported three lost time injuries during the
quarter. Safety programmes have been intensified to address identified
shortcomings.
Production increased by 36% to 263,932 tonnes of ROM coal in the March 2011
quarter, compared to 193,522 tonnes of ROM coal in the December 2010 quarter.
This increase is primarily attributable to expansion of the pit room to
facilitate additional production from the four underground sections.
A total of 121,178 tonnes (Q2:162,146 tonnes) of ROM coal was purchased during
the quarter. Plant throughput of 388,380 tonnes (Q2: 355,698 tonnes) increased
during the quarter producing 211,473 tonnes (Q2: 185,463 tonnes) of export
quality coal and 66,907 tonnes (Q2: 67,758 tonnes) of middlings product for
Eskom.
MARKETING AND LOGISTICS
During the quarter, a total of 735,680 tonnes (Q2: 812,923 tonnes) of coal was
sold, consisting of 198,347 tonnes (Q2: 170,776 tonnes) of export coal through
the Matola Terminal, 418,141 tonnes (Q2: 504,731 tonnes) of export quality coal
on a free on rail basis and 119,192 tonnes (Q2: 137,416 tonnes) of middlings
coal to Eskom. Total sales by colliery for the quarter were as follows:
Woestalleen 423,529 tonnes (Q2: 583,617 tonnes) and Mooiplaats 312,151 tonnes
(Q2: 229,306 tonnes).
Completion of phase three of the port upgrade and expansion program resulted in
the Company`s export capacity at the Matola Terminal in Mozambique increasing
from 1.0mtpa to 3.0mtpa during March 2011. The Company also benefitted from
additional rail capacity created by Transnet Freight Rail during the period,
with the Maputo Corridor`s average weekly capacity increasing by more than 70%,
resulting in railings of 278,077 tonnes to the Matola Terminal (Q2:192,945
tonnes) during the quarter.
SUMMARY OF PRODUCTION AND SALES (TONNES)
WOESTALLEEN MOOIPLAATS TOTAL
MARCH 2011 QUARTER
ROM production 845,515 263,932 1,109,447
ROM coal purchased - 121,178 121,178
Total coal processed 907,978 388,380 1,296,358
Overall Yield 64.3% 71.7% 66.5%
Total coal produced 583,967 278,380 862,347
Export coal 499,117 211,473 710,590
Middlings coal 84,850 66,907 151,757
Coal railed to the Matola - 278,077 278,077
Terminal
Total coal sales 423,529 312,151 735,680
Export quality - Matola Terminal - 198,347 198,347
Export quality - Domestic FOR 356,986 61,155 418,141
Middlings quality - Eskom 66,543 52,649 119,192
DECEMBER 2010 QUARTER
ROM production 761,393 193,522 954,915
ROM coal purchased - 162,146 162,146
Total coal processed 829,065 355,698 1,184,763
Yield 72.2% 71.2% 71.9%
Total coal produced 598,308 253,221 851,529
Export coal 500,940 185,463 686,403
Middlings coal 97,368 67,758 165,126
Coal railed to the Matola - 192,945 192,945
Terminal
Total coal sales 583,617 229,306 812,923
Export quality coal sales - - 170,776 170,776
Matola Terminal
Export quality coal sales - 504,731 - 504,731
Domestic FOR
Middlings quality coal sales 78,886 58,530 137,416
(Eskom)
VELE COKING COAL PROJECT - TULI COAL FIELD (100%)
As announced at the end of the December quarter, the development phase of the
Vele coking coal project ("Vele Colliery") is near completion. No construction
or mining activity has taken place at the Colliery since the Compliance Notices
were served on the Company by the South African Department of Environmental
Affairs ("DEA") in August 2010. The mine remains on care and maintenance.
The Company continues to work closely with various South African government
departments to resolve these issues. The South African Department of Water
Affairs ("DWA") granted the Integrated Water Use Licence ("IWUL") for the
Colliery on 29 March 2011 and the Company submitted the final set of
rectification papers in terms of Section 24G of the South African National
Environmental Management Amendment Act, 1998 (Act No. 107 of 1998) ("NEMA") to
the DEA during the reporting period.
MAKHADO COKING COAL PROJECT - SOUTPANSBERG COAL FIELD (100%)
The NOMR application for the Makhado Project was lodged with the DMR in January
2011 and formally accepted by the DMR at the end of February 2011. This allowed
for the commencement of the rigorous processes required prior to the granting of
the NOMR.
During the quarter, independent experts continued with the baseline social and
environmental studies for the NOMR and the consultation processes with
interested and affected parties. Extensive economic, social and environmental
impact studies will be prepared as part of the NOMR process resulting in the
formulation of a detailed Environmental Management Plan, as part of the overall
submissions required for the application.
The Company completed the review process for the Makhado Project Definitive
Feasibility Study ("DFS") during the reporting period. Upon completion of the
DFS and approval thereof by the CoAL Board of directors ("Board"), the detailed
design phase of the Project will commence. The Company envisages that completion
of the DFS and the subsequent Board approval will be finalised during the second
half of 2011.
Extraction of the bulk sample was completed during the quarter, and the Company
commenced transportation of the ROM sample to Exxaro`s Tshikondeni Colliery for
processing. The sample is expected to yield approximately 3,000 tonnes of coking
coal for further testing by ArcelorMittal (South Africa) and other potential
export customers. The results of these tests are intended to facilitate the
finalisation of the proposed off-take agreement between CoAL and ArcelorMittal
SA.
CORPORATE ACTIVITY
DEUTSCHE BANK FACILITY
The Company, through its wholly owned subsidiary Langcarel (Pty) Ltd, has
secured a US$50 million revolving thermal coal export finance facility from
Deutsche Bank. The facility will be used for capital expenditure and general
working capital purposes. Additionally, during the quarter, this facility was
used to repay the existing fully drawn loan facility of US$20 million with JPMC.
Authorised by
JOHN WALLINGTON
Chief Executive Officer
28 April 2011
JSE Sponsor
MACQUARIE FIRST SOUTH ADVISERS (PTY) LIMITED
For more information contact
John Wallington Chief Executive Coal of Africa +27 11 575 7423
Officer
Wayne Koonin Financial Director Coal of Africa +27 11 575 6797
Ryan Rockwood Transaction Adviser Azure Capital +61 447 760 058
Romil Patel / Nominated Adviser Evolution +44 20 7071
Chris Sim Securities 4300
Jos Simson / Emily Financial PR Tavistock +44 207 920
Fenton 3150
Melanie de JSE Sponsor Macquarie +27 11 582 2000
Nysschen / Annerie
Britz / Yvette
Labuschagne
www.coalofafrica.com
About CoAL:
CoAL is an AIM/ASX/JSE listed coal mining and development company operating in
South Africa. CoAL`s key projects include the Woestalleen Colliery, the
Mooiplaats thermal coal mine, the Vele coking coal project and the Makhado
coking coal project.
The Mooiplaats thermal coal mine commenced production in 2008 and is currently
ramping up to produce 2 million tonnes per annum ("mtpa"). CoAL`s Makhado coking
coal project is expected to start production in 2013 and timing for Vele to
reach production is still to be confirmed. These operations are targeted to
collectively produce an initial 2mtpa ramping up to a combined annual output of
10mtpa of coking coal.
In 2010, CoAL completed the ZAR467 million acquisition of NuCoal Mining (Pty)
Limited ("NuCoal"), a thermal coal producer with assets in South Africa in close
proximity to CoAL`s Mooiplaats mine. NuCoal owns the Woestalleen Colliery, which
has a number of off-take contracts in place and processes approximately 2.5mtpa
of saleable coal for domestic and export markets. NuCoal also owns two
beneficiation plants, one fully operational Zonnebloem mine producing
approximately 300kt per month of ROM coal and has recently commenced production
at a Hartogshoop mine.
Date: 28/04/2011 07:11:35 Supplied by www.sharenet.co.za
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